Budgeting, monitoring expenses, and protecting cash are three powerful functions that allow you to manage your construction business’s financial status with confidence and increased certainty.
Budget Strategically
Construction company management teams with a clearly defined budget streamline spending and keep internal controls in check.
Before going further, let’s clear up a misunderstanding. Many people mistakenly believe that a budget is a fettering device. In actuality, it is more like a harnessing device. It allows you to develop a pivotable plan. It enables you to guide your construction business through good times as well as turbulent times.
Following is a list of what you can expect from a clearly defined budget.
Allows alignment to critical strategic goals and priorities to meet objectives.
Helps monitor performance throughout the year.
Ensures resource availability.
Provides guidance for future performance both internally and externally.
Improves the decision-making process.
Identifies problems before they occur, such as raising cash or dealing with cashflow difficulties.
Sets the stage for expenditures, including allocating appropriate resources to projects.
Helps prioritize projects.
At no time does a budget ask you to check your brain at the door. For example, regarding the last item on the above list, “helps prioritize projects,” it is not the budget alone that is the guide. When prioritizing projects, other considerations will include an understanding of the Return on Investment (ROI), the alignment with company values, the skills and abilities of your team, and the impact on broader financial goals.
One more thing you can expect from a clearly defined budget is the increased availability of financing options. Investors or loaning institutions want to see documentation concerning the budget and the actual spending. They want to understand your ability to handle your construction company’s finances, how you allocate funds, and if you can pivot when appropriate.
Monitor Expenses Faithfully
Construction company management teams that set up precise methods to monitor expenses remain steady yet flexible when determining next steps.
A robust system is the best way to keep track of your construction business’s expenses. It allows you to make data-informed decisions about where to spend or cut money. When you monitor expense records, you understand where your company’s money is going. Further, it gives you more certainty about what needs to be done to strengthen your construction company’s financial position.
Monitoring your expenses provides certain benefits that can include:
Easily spot fraud before it harms your construction business.
Allowing you to determine how profitable your business is quickly.
Fixing and improving your spending habits.
Being better prepared for independent and government audits of your company.
Noticing deductible business expenses, thus reducing your tax burden.
Seeing whether you’re over or under your budget so you can make adjustments as needed.
Giving you a heads-up concerning your ability to attract investors or loaning organizations.
Increasing your ability to perform more accurate financial planning.
Monitoring expenses allows you to optimize, maximize, and manage your construction business. It also enables you to handle budgeting irregularities and better understand where money and time are spent.
Protect Cash Aggressively
Construction company management teams that protect their cash are better equipped to overcome expected and unexpected obstacles.
The idea is to have an approach to cash flow management that sets aside categorized percentages from each sale. At The Profit Constructors, we’ve dubbed it the Confident Cash Control System.
When you adhere to the Confident Cash Control System, you can visualize how much money you have in each budget category for the month.
There are three ways this system makes protecting your cash easier; they are:
It allows you to evaluate how much you spend and for what it is spent.
It compels you to stop overspending in unnecessary areas.
It enforces the building of necessary savings for both tax and profit.
Our clients have noticed two more benefits with the cash control system in place. They are:
It releases you to bid more confidently.
It grants you peaceful sleep the night before payroll must be met.
Protecting your construction company’s cash is a powerful thing. It allows you to care for your family, provide an income for your employees, serve your clients well, and do your part in building America!
Has your interest been piqued? Are you ready to implement powerful financial management strategies in your construction business? Then, get in touch.
Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:
Clients and customers
Employees and subcontractors
Vendors and service providers
Governmental entities
Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:
Remain informed
Avoid hassles
Reduce risks
Be future-ready
Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735
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